Paul Smith orders Russian stores to close and admits a ‘mistake’ not doing it sooner
British designer Paul Smith has admitted making a “mistake” as he ordered his Russian stores to shut.
The fashion giant had allowed them to stay open under a franchise agreement despite competitors withdrawing from the country before or immediately after the war in Ukraine began.
Three stores under the Nottingham-based brand had been operating in Moscow, including one at a designer mall popular with oligarchs, and another store was open in St Petersburg.
Sir Paul, 76, said he had now cut ties with his company’s partner operating in Russia and regretted not doing so earlier.
His spokesman said: “The company does not trade directly with Russia, but, for two decades, we have had a franchise partner who operates stores in Russia. We now realise it was a mistake to allow these stores to continue trading in our name against the background of the war in Ukraine. We have requested that these stores are closed and we have now ceased all supplies to the distributor.”
The Telegraph understands that until this week, Paul Smith had still been supplying its partner operating in Russia but has now halted this with immediate effect after facing questions about sales in the country.
Last week, an investigation by the Daily Mail found that a Paul Smith ship from Moscow was still open and selling stock, including some items that went on sale after the war began.
The lingerie brand Agent Provocateur also had a store open in Moscow while new Rolls Royce cars were also found to be on sale, but the company said they had been shipped to the country illegally.
Online stocks of Russian department stores also show around a dozen UK brands still on sale in the country, however, most of these items are believed to have been shipped before the war began.
Under sanctions, brands can still supply goods to Russia if they are sold for less than £250 but most major designers pulled out of the country immediately after the war. There is no suggestion Paul Smith broke any rules.
Sources said that a loophole meant more expensive goods could still reach Russia if they are shipped to Kazakhstan which faces no sanctions and is in a customs union with its neighbour.
However, brands will be breaking sanctions if they knowingly turn a blind eye to goods restricted by sanctions they believe could be destined for Russia.
Wealthy Russians are also believed to be travelling to Dubai to stock up on goods of fashion brands.
‘Not morally right’
Paul Alger MBE, international business director of the UK Fashion & Textile Association, said that most brands decided from the outset it was “not morally right for them to be selling to Russian retailers and consumers” even before luxury goods sanctions were brought in.
“Some Russian stores have offered to handle imports from UK brands through other countries but that would be in breach of the rules if the wholesale price of the goods exceeds £250. Whilst there are some exceptions, my perception is that most UK companies are still avoiding Russia even below the threshold because they think it is the right thing to do.”
He added that the decision not to ship to Russia was proving difficult for some companies who wanted to “make a difference to the war effort” but had to “sacrifice parts of their business” and competitors from other companies would try to fill the gap in the market left by their withdrawal.
“There will be many EU and Turkish companies in particular, looking to capitalise on UK brands like Paul Smith leaving the Russian market, particularly with goods sold below the EU’s more generous €300 (£267) threshold.”